Sri Lanka today is certainly NOT a safe holiday destination. Any minute anything can go wrong. Such is the condition. Especially with the impending revenge attack by LTTE for killing Tamilchelvam. The idea of going on a vacation is to unwind and relax. Not the other way round ! So my personal advice is avoid Sri Lanka till things improve internally.
Sumitran has a point. But I do not know how far it can be stretched. By that logic, one cannot really venture out for a holiday in most parts of India, till the various internecine problems "improve internally".
Here's what an American friend of mine remarked about timing a safe visit to Sri Lanka: "Always plan the visit just after a blast, that's when it is the safest!"
Jokes apart, let us admit that Sri Lanka is best avoided in a very "tense" period. But even in such periods it is really worth a try. And if you find yourself there during such times, just follow some simple cautious examples. Stay in the best resorts along the Western Coast (I can't think of one that was blown away); Don't travel or linger too much on roads or public places, escpecially in Colombo. Travel in hotel cabs or call-taxis. These would perhaps drive cost of the holiday up (but not that drastically), but it is worth that to truly "unwind and relax".
In the 10+ years of war, neither side has targetted tourists, and actively avoid creating problems in tourist areas, due the massive publicity were any tourist to be hurt due to this conflict. As long as you avoid the far northern areas, you can enjoy a fantastic holiday at very low prices (five star hotels under $100!).
